When there is a deterioration in financial institutions' balance sheets ________.
A) economic activity contracts
B) asset prices increase
C) financial engineering takes place
D) financial globalization increases its pace

Question

Quizplus · Accepted Answer

When there is a deterioration in financial institutions' balance sheets, it means that they are experiencing losses and may be less willing or able to lend money. This can lead to a contraction in economic activity as individuals and businesses have less access to credit.

When There Is a Deterioration in Financial Institutions' Balance Sheets